SALGA Calls for Urgent Overhaul of Local Government Funding System Amid Deepening Financial Crisis
The South African Local Government Association has stepped up its push for a full review of how municipalities get funded, pointing out that many councils are struggling to stay afloat. This comes after the recent mini budget laid out plans for rising revenue, but SALGA warns that without big changes, local services could keep suffering. The call highlights ongoing woes like huge debts and spending gaps that hurt everyday life in towns and cities across the country.
With elections on the horizon and communities demanding better roads, water, and lights, this review could reshape how money flows to the grassroots level. SALGA’s move shows a drive to fix long-standing issues, aiming for stronger councils that can deliver for people.
Reasons Behind SALGA’s Push for Review
SALGA says the current funding setup is not working, leaving many municipalities short on cash to run properly. They note that councils face growing operating deficits, where costs outstrip what comes in, making it hard to fix or build things like roads and clinics. This squeeze comes from years of underfunding and rising demands on local governments.
A big part of the problem is unpaid bills. As of March 2025, households, businesses, and even government departments owed municipalities a staggering R416 billion. This massive debt ties up money needed for upkeep, leading to crumbling services that affect everyone from school kids to shop owners.
SALGA’s Lerato Phasha explained that without a fresh look at the system, these troubles will only get worse. The group links this to the need to update old policies, like the 1998 White Paper on Local Government, which guides how councils work and get money.
Financial Projections and Challenges Highlighted
The recent Medium Term Revenue and Expenditure Framework from Finance Minister Enoch Godongwana forecasts municipal revenue climbing from R675.8 billion next year to R712.6 billion in 2026/27 and R753.5 billion in 2027/28. While this sounds like growth, SALGA argues it falls short of what is needed to cover real costs and invest in the future.
Councils struggle to borrow from banks or save up for big projects because of their shaky books. This leaves them stuck in a cycle of just scraping by, without funds for growth or emergencies. SALGA warns that without more sustainable cash flows, services like waste collection and street lights could slip further, hitting poor areas hardest.
SALGA’s Proposals and Steps Forward
To tackle these issues, SALGA wants a complete rethink of funding rules, working with all sides including residents. They stress the need for long-term fixes that make councils stronger and better at serving people. “We need to work together to develop sustainable ways of funding and financing municipalities,” Phasha said.
One quick win they rolled out is a revised exemption process to help cash-strapped councils during wage talks with workers. This aims to ease pressure while bigger changes happen. SALGA is also pushing for updates to key laws, urging recognition of the funding gap in things like the 2025 Division of Revenue Bill.
The group is leading on the White Paper review, aiming to have a new version ready by March 2026. This would reshape governance, funding, and how councils run, making them more capable in a changing world.
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